Vitalhub Corp.

2025 second quarter conference call. With me on the call today are Vital Hub CEO Dan Matlow and CFO Brian Gothenburg. After our prepared remarks, we will open up the line to questions from analysts. Please press star 1 or use the raise hand function to indicate that you would like to ask a question. Now, before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, please review the forward-looking statements disclosure in the earnings press release and in our CDAR filings. As well, our commentary today will include adjusted financial measures, which are non IFRS measures. These should be considered as a supplement to and not a substitute for IFRS measures. Reconciliations between the two can be found in our CDAR filings. Now with that, I'll hand the call over to our CFO, Brian Gothenburg, to go over the financial highlights for the quarter. Over to you, Brian.

Good morning, everyone, and thank you for joining the call today. We are pleased to report results for the second quarter of 2025. In the June quarter, we added $1.9 million of organic annual recurring revenue and delivered a 26% adjusted EBITDA margin. In a moment, Dan will provide an update on the business. First, I'll provide a summary of our second quarter financial performance. Our annual recurring revenue was $79.6 million to close the quarter, an increase of 55% over the prior year. Over the previous year, organic growth contributed 14%. In the second quarter, total revenue was $23.9 million, an increase of 47% year over year. Recurring revenue for the term license maintenance and support segment was 19.9 million or 83% of total revenue. This compared to 13 million or 80% in the prior year period. We added a new segment, virtual care term license that relates to the attend anywhere platform acquired with the induction acquisition. Virtual care term license revenue was 300,000 in the quarter For reference, total induction revenue was $500,000 from the date of closing to June 30th, 2025. Perpetual license revenue was $1 million in the quarter, an increase of $22,000 over the prior year period. An increase from $22,000 in the prior year period. Services hardware and other revenue was $2.7 million in the quarter, a decrease from $3.2 million in the prior year period. Our gross margin was 81% of revenue, consistent with the prior year period. Net income before taxes was 2.3 million, up 63% year over year. Adjusted EBITDA for the quarter was 6.3 million, or 26% of revenue, compared to 4.2 million, or 26% in the prior year period. We think this is a strong proxy for cash flow. We closed the quarter with $94 million of cash. After June 30th, we paid about $38.5 million to Funavari and repaid a $15 million bridge loan. All considered, our cash balance is north of $45 million today. We're in a comfortable position to execute on growth and acquisition opportunities as we work to integrate the new acquisitions. And with that, I'd like to hand the call to Dan for an update on the business.

Good morning, everyone. As I always do, I'm just going to do this in a little bit of an informal sense and then very happy to take questions from analysts and try to fill in the gaps that we haven't totally. But yeah, we are... happy with our Q2 results, you know, considering we've had Medcurrent and Strata just a little while ago, and both those organizations came into the organization on a not really on a profitable basis, and there's still work to to go on into those organizations. So the rest of the company definitely came up to fill that scenario in respect to our costs and our basis there. And we're excited about that. We're still working on Strata and hopefully expect to get some more gains from that. Um, again, we, we like to think that the quarter again, just proves the model. And, and I think the model is the most important thing that we're trying to focus on right now is that, uh, you know, we, we like to think it, it, it's a good model. It's doing what we hope it will do. And we continue to execute it in our teams, um, that we acquire in our management team, executive team, understand, uh, what we're trying to do and what we're trying to accomplish. And we're really getting some momentum internally in terms of what that's about. We're busy though. It's really four acquisitions and some significant size over the last six months. And we're continuing to work on those every day that we're doing. uh you know we're we're at the uh the 90 million uh ar level um hopefully you know it's gonna be pretty cool when we can hit that hundred million dollar ar level but it's knocking on the doorstep and uh we continue to work and it just provides that really uh big base of of good revenue that allows us to do what we need to do and if we had to absorb some bumps in the road so we're uh we're excited to to be able to do that organic growth continues to do what it does. We continue to provide it. And our hope is we continue to provide it. Again, as I always say here, we're not a single product-based vendor. We've got a whole bunch of multiple ways to make organic growth. And we got a whole multiple ways of not making organic growth. So predictability is, is, is challenged for, for that. And, but so far so good. We, we continue to do that, but you know, I always caution and stay in our investor meetings. Like, don't get too excited if we do 2.5 million of ar and don't freak out if we do 500 000 of ar and a quarter it's just that type of business to do it uh we like our arr we want we want our growth we want our organic growth but uh we're you know it's always cost first the bottom line first here for us and uh that's sort of how how we work here as an organization The macro levels still seem pretty good for organic growth levels. We're still seeing government activity in segments of our portfolio where they're buying solutions and we're seeing changes in other parts of the market. the portfolio where they're not buying it as much and you know it's the value of having all these different acquisitions is uh when one area is not going the other areas can so we're we continue to move and and continue to uh to do what we're doing um you know there's uh The continuing, you know, in a bunch of different funds, we'll talk a little bit about induction. Induction is a UK based business. It's a challenging acquisitions in terms of it was publicly traded and there was a significant amount of costs. in that business that we felt was not being run correctly. And, and we felt there, if we could take this thing over and we paid a, a pretty good price for the organization, but we have work to do to get that business right-sized and we're in the middle of it right now. So, um, we're working hard at it and we, we, uh, We expect to get a lot of the work done in Q3 and hopefully start right-sizing that thing in Q4 and then a little bit by little bit on the quarters after. But we're not taking our time here and we're moving pretty quick at it to try to get it to the right format that we need. We really did that acquisition for the zesty solution. We didn't have a portal based solutions in that it really that provides the front end to get into healthcare organization. So we have our own electronic health record systems, such as trade and case works and. diamond and twinkle in the UK that can use a front end solution. So Zesty will become that front end solution where we're required to do that. And we also felt there was opportunities to integrate that solution with our in touch and our synopsis and my pathway solution to provide one comprehensive solution to the marketplace where it's needed. So We're excited about that product and what it can do. It has a partnership with Cerner in the UK. So every time Cerner is sold in the UK, Zesty is sold along with it. So it continues to do that business to do it. So we continue to work on that. Attend Anywhere, very different product. We purposely took it out of our ARR numbers because it's not ARR, it's user-based license based on usage. And there's, you know, there's minimum thresholds, but there's no real contractual requirement to... to do, you know, to recur or not recur. So it's usage-based type of product. So we did not want it to muddle what we've called pure SaaS software ARR. And we leave that as a separate segment. So us and the analysts can dissect that on its own basis. And we think it was a smarter thing to do with it. On to Novare. We are really excited about Novare. It was... a bit of a competitive process to get it. And we got it. Um, Navari is being around for a very long time, a very strong brand in Canada, um, based out of Kingston and it's done some good work and it has started to make headway in the UK and Australia. So, uh, we think we can take it to the next step in, in UK and so forth. Uh, there's a lot of, um, buzz in the Canadian marketplace for the referral management-based system and connecting organizations together. And Navarri is right in the middle of that for certain pathways, primarily the surgical and what they call central intake, which is really mental health and imaging referrals. And we think it will provide a significant amount of the organizations ARR going into, you know, 26 and 27 and onward of our business. So we're looking forward to that business and working together. We've known each other for a long time and We're excited to have John and John Sinclair and the team as part of Vital Hub. It's really a good fit and we're excited to do that. Where are we sitting now? What do we do now? We think we're in a pretty good state. We're generating good cash. We're north of 45 million of cash in the account at this stage. So we're still coming out of here. We're generating cash. there still are other acquisitions that are coming at us. And we're being a teeny bit more careful trying to get these guys digested a little bit. But if they're a little on the smaller side or if it's something that we just have to do because it makes sense, we're going to do it. So we continue to move along in all those directions. And that's it for me today. I'd be happy to answer some questions.